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Is local passenger transport subject to VAT?

Answered by TI from the Federal Tax Authority’s own law · 25 September 2026. Guidance, not tax advice: rely on the official text.

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No. Local passenger transport within the UAE - like taxis, buses, trains or ferries - is exempt from VAT, so no VAT is charged on the fare.

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The detail

Local passenger transport is exempt from VAT under Article 46(4) of the Federal Decree-Law, provided it is carried out in a 'qualifying means of transport' as defined in Article 45 of the Executive Regulation. This covers land vehicles (taxi, bus, train, tram, monorail), water vessels (ferry, abra) and aircraft/helicopters, travelling from one place in the UAE to another. It does not cover international air carriage or trips whose main purpose is sightseeing or entertainment, which fall outside the exemption.12

What the law says

  • Article 46(4) of the Federal Decree-Law exempts the supply of local passenger transport from VAT.2
  • Article 45(1)-(2) of the Executive Regulation exempts transport by a qualifying means of transport (land, water or air vehicles designed for passenger transport) from one place in the UAE to another.1
  • Article 45(3)-(4) of the Executive Regulation excludes international air carriage and pleasure/sightseeing trips from this exemption.1

What it depends on

  • The vehicle, vessel or aircraft must be designed or adapted for passenger transport and meet the 'qualifying means of transport' definition.1
  • The journey must start and end within the UAE; international carriage by air is excluded.1
  • Transport whose principal purpose is sightseeing, catering or other entertainment is not exempt.1

Check before you rely on it

  • Confirm the vehicle/vessel/aircraft used meets the qualifying means of transport definition.
  • Check the journey is wholly within the UAE, not international air carriage.
  • Check the trip is genuine transport, not a sightseeing or entertainment excursion.
Sources (2) — read the official text
  1. 1VAT Executive RegulationArticle 45Executive Regulation
    Article 45 – Exemption of Local Passenger Transport Services
    Read the article
    Article 45 – Exemption of Local Passenger Transport Services 1. The supply of local passenger transport Services in a qualifying means of transport by land, water or air from a place in the State to another place in the State shall be exempt. 2. The phrase “qualifying means of transport” means: a. A motor vehicle, including a taxi, bus, railway train, tram, mono-rail or similar means of transport, designed or adapted for transport of passengers. b. A ferry boat, abra or other similar vessel designed or adapted for transport of passengers. c. A helicopter or airplane designed or adapted for transport of passengers and approved for transport of passengers in accordance with Federal Law No. 20 of 1991 on Civil Aviation. 3. As an exception to Clause 1 of this Article, the Service of transporting of passengers from a place in the State to another place in the State shall not be considered a local passenger transport Service where the transport is by aircraft and constitutes “international carriage” as defined in the Warsaw International Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929. 4. As an exception to Clause 1 of this Article, the transport of passengers shall not constitute a supply of local passenger transport Services where it is undertaken in the context of a pleasure trip where the manner in which the trip is held out indicates that its principal objective may reasonably be said to be sightseeing, or the enjoyment of catering services, or other forms of pleasure or entertainment. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 35 Title Eight – Accounting for Tax on Certain Supplies
    Official PDF, pp. 35–36Captured from the FTA website on 10 Sep 2026Found by following a reference in another source
  2. 2VAT LawArticle 46Law
    Article 46 - Supply Exempt from Tax19
    Read the article
    Article 46 - Supply Exempt from Tax19 The following shall be exempt from Tax: 1. Supply of financial Services that are specified in the Executive Regulation of this Decree-Law. 2. Supply of residential buildings through sale or lease, other than that which is zerorated according to Clauses 9 and 11 of Article 45 of this Decree-Law. 3. Supply of bare land. 4. Supply of local passenger transport. The Executive Regulation of this Decree-Law shall specify the conditions and controls for exempting the supplies mentioned in the preceding Clauses of this Article. Chapter Three – Single and Mixed Supplies
    Official PDF, p. 23Captured from the FTA website on 9 Sep 2026Found by following a reference in another source
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Written by AI from the FTA sources above and checked before display. Not tax advice or official FTA information - confirm with a tax adviser before you act. Full disclaimer

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